GOVERNMENT SHUTDOWN DEMONSTRATES WHY EMERGENCY SAVINGS IS NOT A WANT BUT AN ESSENTIAL NEED!

The partial government shutdown, which began Dec. 22, 2018, has stretched well into 2019 and may continue for weeks or months given the two parties inability to negotiate and behave like middle grade children.

About 420,000 “essential” employees are working without pay, while another 380,000 have been ordered to stay home. In some cases, the furloughs have forced government employees to tap into their savings, apply for unemployment, add to their credit card Debt and even try crowd sourcing to make ends meet. TSA employees are calling in sick and looking for jobs. Many of these trained TSA employees will not return to TSA.

I have seen some RUDE articles making fun about impacted federal employees and that is DEAD WRONG. These people lost their income through no fault of their own. But reality, losing your income has become the norm in the US, with layoffs, plant shutdowns, bankruptcies, mergers and acquisitions, shipping work over seas, cost cutting, Artificial Intelligence (AI) etc. And it is only going to get worse. {A future blog will discuss the catastrophic impact Artificial Intelligence will have on employees over the next 15 years and how to SURVIVE/THRIVE.}WE ALL (REGARDLESS OF INCOME) NEED EMERGENCY SAVING

Approximately 80% of American workers are living paycheck to paycheck. Federal employees are no different stating: “We do not know how to put food on the table.” Let’s learn from this crisis forced on our fellow citizens.

THE IMPORTNACE OF EMERGENCY SAVINGS

I know it is HARD to build up a six-month expenses, emergency savings account. Some of you will say you cannot afford to. I say you CANNOT AFFORD NOT TO!

Mom and Dad taught me to live below my income. And my Mom, the CFO of the family was a terrific saver. My brother and I were born in NC when public schools were still segregated (Separate and NOT EVEN CLOSE to equal). We lived in Rose Hill, (Home of The World’s Largest Frying Pan- I Kid You Not!) a small rural town in Duplin County. When my older brother was born Mom and Dad were teachers, during an era when black teachers were forced to take seven years off WITHOUT pay for the sin of having a baby. For completely UNETHICAL and STUPID reasons! In addition to forcing black Mom’s to sit out of work for seven years, Duplin County paid their black teachers significantly less than white teachers. They could do this because at this time schools were still segregated. Many black teachers in that era did not have children because of the above seven-year financial penalty. Many young teachers chose to not have children and some told me it caused lifetime of pain and regret. But my parents chose having two sons over two incomes. {Actually I am not that sure they choose me. I always asked Mom if I was “the best surprise of her life”!} Three years after I was born the policy was finally eliminated. But Mom was barred from teaching for ten years. Mom taught me something that has stuck: “Family is more important than money”. And while black teachers were paid significantly less money than white teachers in that era, (by the way NC still pays teachers in the bottom quartile of US states) they chose to sacrifice and have two beautiful and handsome sons! Mom was the book keeper/CFO and she was good! She managed the checking account and she still saved money during those ten years. We lived beneath our means. And my brother and I never noticed, because our parents shouldered that burden to protect us. My lesson for you- Regardless of how much you are EARNING- LIVE BELOW YOUR MEANS!

Having six-month expenses saved is not a nice to have. In 2019 it is a MUST have. What expenses can we cut and put $10 or more each week in a separate emergency savings account? We ALL spend money we do not have to. The one key strategy to creating six months of emergency savings is pretty simple. LIVE BENEATH YOUR MEANS!

THE “NOTHING JAR”

Yesterday I learned of a unique gift – the “Nothing Jar”. A new acquaintance explained her then Boyfriend insisted (1,261 times) he did not want anything for Christmas. She thought how could I honor his request and give him a gift. She took a mason jar, labeled it with all the words equaling nothing and gave him that as a gift (Look above and you will see a similar label). He frowned when she gave him a wrapped gift, but laughed when he saw the “Nothing Jar”. To this day he places his change in that jar. Sometimes a few cents, some times several dollars. And that is how he now saves money.

If you like this idea, print the above word cloud, label your jar and place your “nothing” money in that jar. Do this routinely anytime you receive change when making a purchase. You will start your emergency savings. And for those of you more anal people, like me, you may prefer the below word cloud.

MY PERSONAL NEEDS FOR EMERGENCY FUNDS

When I graduated from college, I read an article that stated in all likelihood I would work for ten companies. I laughed. I thought maybe three companies. I ended my professional career working for ten corporations! I experienced mergers, acquisitions, plant shutdowns, EVIL BOSSES, etc and I was laid off four times. So I know the fear these furloughed federal employees are feeling. I survived each layoff including the one when my beautiful daughter was in college. Because of my parents I have always built an emergency fund. And because of my Uncle, I built multiple streams of income. If you do not have an emergency fund or it is less than $1,000, do NOT beat yourself. Instead, figure out how you can build that six-month of expenses, emergency fund. Use the Nothing Jar idea if that appeals to you. Or create a new savings account and auto add $10+/ week or more if you can afford it. Next week I will talk more about what to do with your Emergency Money as it grows. As we must always MAKE OUR MONEY WORK HARDER THAN WE DO!

CONCLUSION – THE LESSON WE MUST LEARN FROM GOVERNMENT SHUTDOWN

It is absolutely necessary to have a six-month expenses, emergency fund. We cannot wait for a crisis and then start an emergency fund. Start YOUR emergency fund today!

Most federal employees did not prepare or expect a government shutdown. Especially one that would last this long, with no end in sight. As a result many can no longer pay rent or mortgages and put food on the table.

It does not make a difference if you are an Amazon package delivery driver or an Amazon executive. If you spend every penny you earn, you will never build a significant net-worth and will never be financially secure. If you make $XXX, live your life off no more than 80% of your take home pay and save the rest.

Below is an article on simple ways to save.
6 Simple Ways to Save Money in 2019
https://www.consumerreports.org/saving-money/simple-ways-to-save-money/

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DISCLAIMER

I am a proud nerd (my beautiful wife and daughter told me so) investment and finance blogger, with University Rutgers, MBA and Harvard University, Advanced Management.
I am a successful investor in equities and real estate and happy to share my personal finance and investment lessons learned with you. I am NOT however, a licensed financial advisor. Please do not construe my suggestions on this blog, as recommendations for your personal situation. For individual finance advice please seek your own licensed CPA or financial advisors.

Powers Investments Management, LLC

This blog will provide, information and simple strategies, that will assist you to achieve YOUR financial objectives and long term targets. For over 30 years, I solved multi-million dollar problems, for Fortune 10-250, companies. My formal education includes: Business, Finance and Chemical Engineering {Problem Solving} at: Harvard, Rutgers and North Carolina State. And an additional 30+ years, managing my family’s investment decisions. I currently manage/advise people with net-worths ranging from the tens of thousands to several million dollars.